This launch of "London Millennium City", in which the Culture Secretary Chris Smith set out his aspirations for drawing visitors to the city for 2000, will exacerbate the shortfall.
Yet canny business travellers are well able to find comfortable, clean city-centre accommodation for much less than the average rate - all thanks to Margaret Thatcher's disdain for the Greater London Council.
Whatever your views on the old GLC, its predecessors at the London County Council chose a peerless location.
County Hall stands almost at the geographic centre of the capital, opposite the Houses of Parliament and adjacent to Waterloo station - London's busiest terminus, and, nowadays, the gateway to Europe.
After standing empty for more than a decade after the demise of the GLC, a Travel Inn Capital occupies former office space in the building.
Rising costs, shortages, strikes, and then the outbreak of war delayed construction of the original building, but its refurbishment as a budget hotel escaped such problems. In less than a year, it has achieved occupancy levels close to 100 per cent by helping visitors to the capital, and not a few business travellers, find an ideal location at very reasonable cost.
Earlier this month I managed to book a room at the flat rate of pounds 55 per night; when it opened less than a year ago, the price was under pounds 50, but demand can clearly sustain a higher rate. The product is not quite as basic as you get with some other low-cost hotel chains. The reception area is staffed, as is the restaurant and bar; at some no-frills hotels, everything from check-in to check-out is automated.
The rooms are furnished as unfussily (and unimaginatively) as you would expect for the price and the television usefully doubles as a radio (no Radio 1 nor Radio 5 Live, mind); but if you are fortunate enough to get a riverside room, the view of London is priceless.
Yet it is difficult to recommend the concept to most business travellers because of the problems with one vital facility: the telephone.
Outgoing calls are barred unless you use an Energis prepaid phone card, which you have to buy from reception. I tried every known combination of digits to secure another telephonic route out of the building, but all were barred.
Suppose a colleague wishes to ring you; a simple matter of dialling the number (0171-902 1600) and asking for the name or room number, you would think. Yet partly due to the hotel's success, pressure on lines means the chances of getting a response seem limited. Most test calls I have made to the hotel get an automated message. This is not helpful to business. Anyone who depends upon effective telecommunications would fare much better at the new Marriott next door, though the rates are about four times higher.
Such is the location that if your contacts are in central London, you might just as well walk; Westminster, Leicester Square and the law courts are within a 15-minute stroll. The Travel Inn is a bargain for pounds 55; but I'd happily pay pounds 75, if only the phones would work.
County Hall Travel Inn Capital, London SE1, can be booked on 0171-902 1600